Independent Auditor’s Report, Fiscal Year Ended June 30, 2023

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Report Summary

Background

The Office of Auditor of Accounts, Delaware Department of Finance, and Division of Accounting present the Annual Comprehensive Financial Report (ACFR) Independent Auditor’s Report on Internal Control, for the State of Delaware for the fiscal year ended June 30, 2023.

This ACFR Internal Control Report and findings were conducted according to Generally Accepted Government Auditing Standards (GAGAS), and do not express an opinion on the effectiveness of the State’s internal controls. The auditing standards require the state to issue a report on the controls relied upon in the financial statement audit of the state’s Annual Comprehensive Financial Report (ACFR),which was released on March 20, 2024.

Although the purpose of the ACFR is to provide financial transparency and accountability for the management of the state funds, this report is to provide information on instances of improper controls and non-compliance that were reportable to the State.

This engagement was performed in accordance with 29 Del. C. § 2906(a). 

Key Information and Findings

CliftonLarsonAllen, LLP ( CLA) issued its opinions on the State of Delaware Annual Comprehensive Financial Report (ACFR) as of and for the year ended June 30, 2023. CLA included a disclaimer of opinion in its Independent Auditors’ Report on the ACFR. CLA issued the Annual Comprehensive Financial Report (ACFR) Independent Auditor’s Report on Internal Control which included a Material Weakness in Internal Control over Financial Reporting for the Unemployment Insurance Trust Fund:

The Department of Labor’s Division of Unemployment (DOLUI) is responsible for maintaining the books and records of the Unemployment Insurance Trust Fund, which is reported as a major enterprise fund in the State’s Annual Comprehensive Financial Report (ACFR). This responsibility includes preparing a cash basis trial balance of the fiscal year end balances of the Trust Fund’s accounts and providing the Division of Accounting (DOA) with support for the yearend accruals to facilitate DOA’s preparation of the full accrual trial balance and the ACFR in accordance with accounting principles generally accepted in the United States of America (GAAP). In summary, the results of our audit procedures identified several material misstatements to various accounts and balances that are indicative of systemic accounting and financial reporting deficiencies in internal control, which ultimately led to a disclaimer of opinion over the Unemployment Insurance Trust Fund and Business-type Activities. The material misstatements and control deficiencies identified included Cash, Accounts Receivable, Taxes Receivable, Accounts Payable, Allowance for Doubtful Accounts, and Revenues and Expenses.

The State’s ACFR examines all funds, departments, organizations, bureaus, boards, commissions, offices of elected officials and authorities that make up the state’s legal entity. Individually presented component units, which are legally separate entities for which the State is financially accountable, are also included.